Contributor
Chutinun Wannapirun
Legal Partner
When foreign businesses establish their operations in Thailand, the question often arises whether their business is required to have a local director or not. In this context, local director refers to a Thai director or a foreign director who has domicile in Thailand. Understanding this legal requirement is crucial for foreign businesses to ensure full compliance with the local law requirement.
Types Of Entities Legally Required to Have a Local Director
1. Foreign Owned Companies Applying for a Foreign Business License (FBL)
Under the Foreign Business Act, a limited company with foreign shareholders holding 50% or more of the shares is legally required to obtain the FBL before commencing restricted business activities in Thailand.
It is mandatory for such companies to have at least one local director, whose name would appear in the company affidavit, who must be either a Thai citizen or a foreigner with domicile in Thailand.
This requirement ensures that foreign-controlled companies maintain local representation and accountability, facilitating regulatory oversight and communication with Thai authorities.
2. Foreign Branch Office
A Foreign Branch Office is an extension of a foreign company conducting business in Thailand without forming a separate legal entity. Unlike a limited company, a Branch Office does not have a board of directors. Instead, the overseas head office must appoint a local Responsible Person for business operation in Thailand, or commonly referred to as Branch Office Manager, who is responsible for business operation of the Branch, whose name will be mentioned on the Certification of Information Kept by Registrar.
The Responsible Person of the Branch Office in Thailand could be one or more persons, but at least one Responsible Person must be either Thai or foreign national with domicile in Thailand.
3. Representative Office
A Representative Office is set up by a foreign parent company to carry out non-commercial activities, such as market research, promoting parent company products, and reporting business information to headquarters. Representative Offices are prohibited from generating revenue in Thailand.
Similar to Branch Office, a Representative Office must appoint at least one local Responsible Person, known as the Representative Office Manager, who must be Thai national or foreign national with domicile in Thailand. The Manager is responsible for ensuring that the office operates strictly within its permitted scope (non-trading activities only), complies with Thai labor and tax regulations, and maintains valid legal standing.
The Representative Office is not required to apply for a Foreign Business License, but it must obtain a 13-digit juristic person number from the Ministry of Commerce via the e-Foreign online system. The name of Responsible Person(s) will be mentioned on the Certification of 13-digit Juristic Person Number of the Representative Office.
Proof of “Domicile” for Foreign Director/Responsible Person
According to the Ministerial Regulation Prescribing Rules and Procedures Pertaining to the Application for a Foreign Business License B.E. 2546, proof of “Domicile” can be provided through one of the following documents:
- House Registration Book (Tabien Baan)
- Certificate of Residence
- Evidence of permission to enter the Kingdom for a temporary stay under the immigration law (such as Thai visa or entry stamp)
Foreign Businesses Not Required to Have a Local Director
1. BOI Promoted Companies
Companies promoted by the Board of Investment (BOI) are exempt from the local director requirement. BOI promotion grants foreign businesses privileges such as tax incentives, exemption from foreign ownership restrictions, and relaxed regulatory requirements.
As these companies are considered to provide significant benefits to the Thai economy such as technology transfer, capital inflow, and job creation, the requirement to appoint a local director is waived, allowing foreign shareholders to retain full control.
2. Companies Under the Treaty of Amity between Thailand and U.S.A.
The Treaty of Amity and Economic Relations between Thailand and the United States allows U.S. nationals and entities to establish businesses in Thailand with national treatment, meaning they are not subject to most restrictions on foreign ownership.
Under the treaty, U.S. majority-owned companies are not required to appoint a local director. This grants American investors greater operational flexibility and control over their Thai businesses.
3.Companies Operating Non-Restricted Businesses
Foreign-owned companies that operate business activities which are not restricted by the Foreign Business Act are not required to appoint a local director/responsible person. For more details about non-restricted businesses: Businesses in Thailand That Do Not Require a Foreign Business License (FBL) – PKF Thailand).
Conclusion
The requirement of the local director depends on the type of entity and the nature of business activities. Foreign investors should carefully review the relevant laws and legal requirements for appointing a local director to ensure full compliance with Thai laws and smooth process for establishment.
Please note that this article does not cover every industry and provides a general overview with focus on foreign business operation in Thailand only. Certain industries, such as tourism, recruitment, aviation, and energy, fall under specific regulatory controls which may required by law to appoint a local director who must be a Thai national.
For detailed guidance or if you have any questions about local director requirements in Thailand, feel free to reach out to us at PKF Thailand. Our experienced team is here to help.
